Ultimate Market Recap: Bleak Outlook for China, Crocs Get Rocked

Wall Street Watch: China’s Grim Picture, Microsoft and Google Continue Spat

The European Commission has forecast a mild recession for the euro zone as the region is projected to shrink 0.3 percent this year. This took a quick turn from November of last year, when EC had forecast growth of 0.5 percent in 2012. One of the greatest contributors to the drastic change is from Spain, which had a previous forecast of +0.7 percent but now has a 1 percent contraction estimate.

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A report called “China 2030″ by the World Bank and government insiders paints a grim picture for the country. China may endure an economic crisis unless it utilizes serious reforms such as scaling back it state-owned enterprises and having them act more like commercial companies. This report will be out on Monday and it also includes a look at some of China’s sensitive economic concerns.

Comcast (NASDAQ:CMCSA) has filed a lawsuit against Sprint (NYSE:S) for the alleged patent infringement of wireless networking technologies from four patents issued during the period of 1999 to 2010. This comes just two months after Sprint launched a suit against Comcast and other cable companies on infringement allegations for a dozen voice-over-IP patents.

Sprint hasn’t responded to Comcast’s new filing while the cable provider has asked the court for an injunction and monetary compensation.

Microsoft (NASDAQ:MSFT) has filed a complaint with European regulators alleging that Motorola Mobility Holdings (NYSE:MMI), through Google’s (NASDAQ:GOOG) support, is misusing patents and demanding unfairly high prices from device makers to use standard patents, reported The Wall Street Journal. The questionable patents affect Microsoft’s laptops and Xbox game console.

Noting concerns of increased identity theft and fraud risk from the recent privacy policy changes made by Google (NASDAQ:GOOG), 36 Attorneys General have sent the company’s chief executive, Larry Page, a letter stating their issues and suggesting guidelines. The company’s new policy begins on March 1, which will combine users’ personal information from web history, YouTube with other Google products. Users will be unable to opt out without leaving the entire Google system.

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7 After-Hours Movers: Hewlett Packard and Limited Brands Drop as Caribou Coffee Pops 2%.

6 Rocking Stocks: Sears Surges 13%, Kohl’s Drops 3.2% and RBS Slashes Pay

Shares of Sears Holdings Corp. (NASDAQ:SHLD) surged almost 13 percent in morning trading.  The company announced it reached a $270 million deal to sell 11 stores to General Growth Properties Inc. (NYSE:GGP).

Target Corp. (NYSE:TGT) shares edged higher after reporting fourth quarter income of $981 million ($1.45 per share), compared to $1 billion ($1.45 per share) a year earlier.  The retailer projects adjusted earnings of $4.55 to $4.75 for the coming year, compared to estimates of $4.28.

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Kohl’s Corp. (NYSE:KSS) shares dropped 3.2 percent in early trading.  The company reported a profit of $455 million for the latest quarter, down from $494 million a year earlier.  Gross margin also decreased from 36.8 percent to 36.2 percent.

Despite reporting a 76 percent drop in net income, shares of Officemax Inc. (NYSE:OMX) popped 2.9 percent.  “Sales trends improved in the fourth quarter but remain soft,” CFO Bruce Besanko said in a statement. “Consequently, we will continue to streamline our cost structure, enabling us to make strategic investments in initiatives that will jump start growth.”

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Shares of Royal Bank of Scotland (NYSE:RBS) jumped 4.2 percent this morning.  Britain’s largest government-controlled lender reported it slashed investment banker pay by 26 percent for 2011.  “The noise around RBS is damaging,” Chief Executive Officer Stephen Hester said on a conference call. “In the last three years we have overcome the effects of this noise. We will try to keep doing that but no one should be under any illusions that you can have your cake and eat it.”

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Hewlett-Packard, VIVUS, Boston Beer, Skullcandy Top Active Stock Movers for Feb 23rd:

Hewlett-Packard Company (NYSE:HPQ): Hewlett-Packard CEO Meg Whitman says the company has to cut costs and is looking for ways that the company can “standardize, optimize and automate many of our systems,” meaning products, not people, reports Business Insider. After Hewlett-Packard reported Q4 results that RBC Capital views as mixed, the firm thinks the fact that the company beat its guidance represents a first step toward restoring investor confidence. The firm maintains an Outperform rating on the stock.   Shares of Hewlett-Packard Company are trading 6.25% lower today.

VIVUS, Inc. (NASDAQ:VVUS): After an FDA advisory panel voted 20-2 to recommend approval of VIVUS’ obesity treatment, Qnexa, JMP Securities believes there is a greater than 90% chance that the drug will be approved by its April 17 PDUFA date. The firm raised its target on the shares to $45 from $16 and maintains an Outperform rating. Shares of VIVUS, Inc. are trading 88.53% higher today.

Boston Beer Co Inc (NYSE:SAM): Sees 2012 depletions growth of 6 to 9% compared to 2011 and targeted revenue per barrel increases of approximately 3%, which the company said will help offset significant barley cost pressures from the 2011 crop. Shares of Boston Beer Co Inc are trading 7.64% lower today.

Skullcandy Inc (NASDAQ:SKUL): Sees FY12 revenue $275M-$295M, consensus $284.83M. Shares of Skullcandy Inc are trading 4.79% lower today.

Garmin, HomeAway, Fluor, Sourcefire, Analog Devices Generate High Stock Trading Demand Feb. 23rd

Garmin Ltd. (NASDAQ:GRMN): In 2012, Garmin is targeting revenue growth of 5-10% in the Aviation segment and says recovery for the aviation industry continues to lag that of the overall economy. Garmin says it is hopeful that the OEM market will stabilize in 2012, but does not expect to he see meaningful growth from OEMs this year. Comments made on the Q4 earnings conference call. Shares of Garmin Ltd. are trading 0.51% higher today.

HomeAway, Inc. (NASDAQ:AWAY): HomeAway sees Q1 revenue $63.7M-$64M, consensus $65.68M. Shares of HomeAway, Inc. are trading 11.36% lower today.

Fluor Corporation (NYSE:FLR): The company said, “Despite continuing economic uncertainty, the Company remains encouraged about future opportunities across its diverse end-markets, and is maintaining its EPS guidance for 2012 at the previously announced range of $3.40 to $3.80 per diluted share, which includes the estimated impact of ongoing operating expenses of approximately $0.20 per share associated with the Company’s investment in NuScale Power.” Shares of Fluor Corporation are trading 5.05% higher today.

Sourcefire, Inc. (NASDAQ:FIRE): Yesterday, Needham raised its estimates and price target for SourceFire citing the company’s strong December quarter results and guidance. The firm reiterates a Buy rating on the stock. Shares of Sourcefire, Inc. are trading 0.09% higher today.

Analog Devices, Inc. (NYSE:ADI): Baird raised its price target on Analog Devices following Q1 results. The firm cited improved fundamentals, strong positioning, and strong product portfolio. Shares are Outperform rated. Shares of Analog Devices, Inc. are trading 0.75% lower today.

Market Recap: HP Drags on Dow But Jobless Claims Buoy Stocks

Markets closed up on Wall Street today: Dow +0.36%, S&P +0.43%, Nasdaq +0.81%, Oil +1.75%, Gold +0.55%.

On the commodities front, Oil (NYSE:USO) rose to $108.14 a barrel. Precious metals were also up, with Gold (NYSE:GLD) climbing to $1,781.10 an ounce while Silver (NYSE:SLV) rose 3.36% to settle at $35.48

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Today’s markets were up because:

1) Jobs. New claims for unemployment benefits were unchanged last week, holding steady for a second week at the lowest level seen since March 2008. The four-week moving average for new claims, a better measure of labor market trends, fell 7,000 to 359,000, also the lowest since March 2008, signaling that employers may be close to ending the long cycle of heavy layoffs, instead preparing for more hiring.

2) Europe. A strong report on Germany’s economy lent some early support to markets this morning, but the European Commission said Thursday that it expects the euro zone to face a mild recession in 2012, thanks to negative growth in Greece, Spain, Portugal, and four other countries in the 17-nation single-currency region.

3) Companies. Sears (NASDAQ:SHLD) traded lower after reporting earnings that fell far short of expectations, while Target (NYSE:TGT) reported better-than-expected fourth-quarter earnings and issued a positive outlook for 2012. IBM (NYSE:IBM), Travelers (NYSE:TRV), and Disney (NYSE:DIS) helped offset Hewlett-Packard’s (NYSE:HPQ) declines after the company reported dismal PC sales for the quarter ended January 31, dragging down 44 percent.

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7 Stocks Hitting Radars: Salesforce Surges 10%, AIG Climbs 3% and Crocs Get Crushed 11%

Shares of Salesforce.com Inc. (NYSE:CRM) surged 10 percent in late trading.  The company reported fourth quarter revenue of $631.9 million, an increase of 38.3 percent from the year-earlier quarter.  “Salesforce.com’s 38% revenue growth in the fourth quarter was a spectacular finish to our fiscal year, a year in which we delivered 37% revenue growth and added nearly 2,500 employees, including nearly 2,000 in the U.S.,” said Marc Benioff, the company’s chief executive officer.

American International Group Inc. (NYSE:AIG) shares bounced 3.3 percent higher after the closing bell.  The company reported net income above expectations.  For the fourth quarter, net income increased 79 percent to $19.8 billion, compared to $11.05 billion a year earlier.

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Gap Inc. (NYSE:GPS) shares declined 1 percent after reporting fourth quarter results.  The clothing retailer reported a 40.3 percent decline in net income to $218 million, compared to $365 million a year earlier.

Despite reporting a 17.8 percent increase in net income, shares of Crocs Inc. (NASDAQ:CROX) were crushed 11 percent in late trading. Net income for the company increased to $5.6 million (6 cents per share), compared to $4.7 million (5 cents per share) a year earlier.

Molycorp Inc. (NYSE:MCP) shares fell 1 percent in extended trading.  The rare earth company reported net income of $26.6 million (26 cents per share), compared to a net loss of $7.9 million a year earlier.

TiVo Inc. (NASDAQ:TIVO) shares dropped more than 2 percent after reporting fourth quarter results.  The company earned $7.2 million (6 cents per share), compared to a net loss of $34.4 million a year earlier.  Earnings were boosted from the company’s patent litigation settlement with AT&T (NYSE:T).

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To contact the reporter on this story: Lindsey Grossman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com